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Grace and Wills Prevail in U.S. Fourth Circuit Coverage Case Complicated by Employer Merger

August 14, 2014

Kathryn Grace (Partner-Virginia) and Linda Wills (Partner-Houston) obtained an affirmed summary judgment in favor of Wilson Elser’s insurer-client in a per curiam, unpublished decision by the U.S. Court of Appeals for the Fourth Circuit. The plaintiff sought coverage under an employer-administered, ERISA-governed group life insurance policy after her husband succumbed to a brain tumor that had limited his ability to work for many months. During that period, his employer merged with another company and switched its group plan to our client-insurer, which denied coverage because the husband had never worked the 30 hours per week required under the policy while it was in effect. The plaintiff sued the employer and the new carrier.

The plaintiff argued that this case fell within the Fourth Circuit's precedent in Canada Life Assurance Co. v. Estate of Lebowitz, 185 F.3d 231, 239 (4th Cir. 1999), where the carrier was held liable based on the employer's determination that the deceased employee had in fact worked the requisite 30 hours per week. Unlike in Canada Life, however, the employer in this case agreed with the insurer that the deceased had never worked 30 hours per week while the policy was in effect. The plaintiff attempted to expand the Canada Life holding by arguing that the insurer should be bound by the employer’s attempts to convince the insurer to accept coverage during the claims process. Notably, the plaintiff successfully obtained summary judgment against the employer in the District Court, and subsequently settled that aspect of the case.

 

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